Should buyers be looking at For Sale By Owners? Can a buyer find a good deal with For Sale By Owners (FSBOs)? Here’s the truth about FBSOs that may surprise you.
The Truth About For Sale By Owners
Every FSBO I’ve ever talked to had a bad experience with a Realtor. A lot of people, not just FSBOs, had bad experiences with Realtors. That’s not front page news. Unfortunately, instead of finding a professional Realtor who really is honest and competent, For Sale By Owners take a different path. They decide to become their own experts. In over 85% of the cases, FSBOs eventually give up and re-list with a Realtor according to a study by the National Association of Realtors.
For Sale By Owners make their first mistake hiring the wrong real estate agent. They compound that mistake by becoming their own Realtor even though they don’t have the knowledge and experience. I would estimate the failure rate for all FSBOs at 98%. It’s not a pretty picture.
For Sale By Owners in MLS
FSBOs are not allowed to advertise in the two primary MLS sites in Clallam County. That means they don’t get the massive exposure they desperately need to reach all the potential buyers. But there are a couple of brokerages that sell a FSBO package for a flat fee of $250 to $450. For that they put the listing in the MLS, but that’s about it. So how does this work out for FSBOs? Not so good. Every FSBO I’ve talked to who has used one of these services was very disappointed and felt like they got ripped off.
For Sale By Owners Fail
I actually called on a FSBO that was listed in the Northwest MLS, because a buyer was interested in the home. Most sellers would be very delighted to have a potential buyer look at their home, but this FSBO was actually rude on the phone from the get go. He asked personal questions on the phone about my clients, but of course, I would not answer confidential information about my clients. It was surprising. He then told me he had other plans and did not want his home showed. No wonder Realtors don’t like to show and sell FSBO homes, and no wonder For Sale By Owners can’t get their homes sold. Sellers cannot and should not be confrontational or rude on the phone to a potential buyer or a buyer’s agent. It’s just crazy.
I communicate typically for months with my buyers, and I know whether they are qualified to buy a home. All my clients have been through my qualification process by the time we start viewing homes. I keep that qualification process confidential. I doubt that very many FSBOs have communicated with potential buyers for months to learn about whether they are qualified or not, and most FSBOs don’t have the training and experience to qualify buyers. A few questions on the phone do not necessarily prove they are qualified.
By the way, the clients I wanted to show the FSBO to are paying cash for a home in the $400,000 plus range. Wow, this FSBO sure missed a qualified buyer by brushing me off! I believe that FSBO thought my clients weren’t qualified. Big mistake. But this is another reason why sellers should list with a professional Realtor. FSBOs make mistakes, some out of ignorance, but other mistakes are made by FSBOs who are totally sincere. It doesn’t matter, any mistake that hinders the sale of a home is a big mistake.
The rest of the story is For Sale By Owners are most often overpriced, and they are quite often very difficult to deal with. I have over three decades of observing FSBOs. It may sound harsh, but honestly, if buyers asked me, I would say don’t bother when it comes to For Sale By Owners. As friendly and positive as I am on the phone when I call a seller, I have to say that the majority of FSBOs that I have called in three decades tend to be confrontational and rather rude on the first phone call. I can only speculate why that would be, but the bottom line is For Sale By Owners are difficult to deal with.
Last Updated on August 8, 2013 by Chuck Marunde
Chuck ~
You probably should tell the WHOLE story when you post a “blog” where you claim to be professional.
That was my customer you just blogged about. You told my customer, in no certain terms, that you did not KNOW anything about the clients that you wanted to show my customer’s house to.
You told my customer that, while all your customers were MILLIONAIRES, you ACTUALLY did not even know if your customers were QUALIFIED to buy the house you wanted to show.
You did not know if they were qualified to purchase an outhouse, much less my customer’s property, you did not know if they were even interested in my customer’s property, you did not know what their qualifications were for the area.
So, tell your readers, HOW does that make you a professional they should hire?
Robin, thanks for leaving your post, although you are upside down and backwards on your “facts.” I see you are a Realtor, which raises a question. You claim a person you think I was writing about was your customer, but a FSBO is not listed, so you could not have had the property listed, which means you did not have a customer. I’ve talked to quite a few FSBOs, and I don’t reveal personal identities when I write an article that uses information from a real life example, so you may be connecting dots that don’t connect. I also change the numbers slightly in my examples just to make sure no one can use the MLS to try to trace back to the property and person who was the basis of my example. But let’s focus on your slander of my character.
First, I have never told a seller that I know nothing about my clients. That would be a bizarre statement for any Realtor. We often don’t know “everything” about buyers who call us the first time, but even then, no one would say to a FSBO, “Hi, I have some clients I know nothing about. Can I show your home?” As you must know from experience, a buyer who calls a Realtor the first time usually shares some details about themselves, what they are looking for, whether they are selling their existing home first, and there’s typically some chit chat about their families and retirement plans. So even an inexperienced Realtor hangs up knowing something about their prospective clients on a first call, and much more as they continue to email, text, and talk.
Second, I don’t know about you, but the buyers that I get as clients who retire in Sequim are typically millionaires, but that doesn’t mean much anymore. The only reason that would come up in a conversation is to make the point that these are buyers who have the ability to buy this home. Thirty years ago it was a big deal to be a millionaire, but today it just means you can retire in a place like Sequim, buy an average home, and live out your retirement. If a person is not a millionaire, including the value of their retirement, they probably aren’t buying a home here.
Third, you say I told “your client” that I didn’t know if my clients were qualified. It is not unusual for a Sequim Realtor to have buyers talking to them who are millionaires or deca-millionaires who have not yet given their Realtor a copy of their pre-approval letter from their mortgage broker. They may not be that far along in their home buying process. Buyers will sometimes say, “I’ve asked my mortgage broker for a letter, and he’s going to get that to me.” This doesn’t mean you don’t show this kind of client a home. If they’re from Redding, California, and they are in Sequim, you show them a home if you have the opportunity.
I’m not sure why you were triggered emotionally, and I don’t know what conversation with whom triggered you, but your anger and slander have no basis in fact here. Usually when someone is triggered and goes on some kind of irrational rant, there’s a deeper reason for their frustration that motivated them. I think whatever triggered you has little to do with how you expressed yourself. There was something else eating at you that you did not share. I’ve learned that the subconscious is a powerful force, and it can be the driving force that causes one to say something they later regret, something that on its face is irrational or exaggerated. Evidence of that here is that it is inappropriate to use this public forum to attack another Realtor.
What do you think readers? Re-read my article above and then read Robin’s angry comment. There is definitely a big disconnect. It’s like the comment has no connection to my article at all. Now that I think about it, this appears to be a personal attack on me for no reason at all.
What I wrote in the article is objective, accurate, and comes from working with FSBOs going back over 40 years in the business. You wanted to vent Robin, and you chose to do so in this public forum, so I’ll play along with you and publish your comment and this reply, and I’ll let the public decide who is “professional”.